EWZ: Brazil Is A Buy Amid Surging Dividend Yield

Oct. 25, 2021 8:02 AM ETiShares MSCI Brazil Capped ETF (EWZ)23 Comments
Stuart Allsopp profile picture
Stuart Allsopp
4.01K Followers

Summary

  • Brazilian stocks have underperformed significantly due to excess fiscal spending, rising inflation, concerns over next year's election, and a collapse in iron ore costs.
  • As a result, the MSCI Brazil index trades at a forward price-to-earnings ratio of just 6.5x and a forward dividend yield of 7.3%.
  • While the iShares MSCI Brazil ETF pays a dividend yield of just 3.0%, this likely reflects the way in which ETF payments are made and should rise significantly from here.
  • The current crisis has a number of similarities to the 2002 crisis but the country's economic fundamentals are much stronger today, largely due to its strengthened external position.

Flag on the map of brazil. Vintage Map and Flag of South america, Latin american Countries Series 3D Rendering

seungyeon kim/iStock via Getty Images

I first went long Brazilian stocks in May 2020 when they were trading at their most undervalued levels in almost two decades (see 'Brazilian Assets Look Worth The Risk'). Although they are still up

This article was written by

Stuart Allsopp profile picture
4.01K Followers
I am a full-time investor and owner of Icon Economics - a macro research company focussed on providing contrarian investment ideas across FX, Equities, and Fixed Income based on Austrian economic theory. Formerly Head of Financial Markets at Fitch Solutions, I have 15 years of experience investing and analysing Asian and Global markets.

Disclosure: I/we have a beneficial long position in the shares of EWZ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (23)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.